Journal of
Corporate
Renewal
Sept
2016
continued on page 8
If or when Brexit happens, it will require
perhaps the most significant review and
revision of U.K. legislation ever undertaken.
• The U.K. does not join the EEA.
On leaving the EU, the U.K. would
become a "third country" for purposes
of the BRRD, and EU member states
would become "third countries" for
the purposes of the Banking Act
2009. One of the consequences
of the U.K. being a third country
would be that, in accordance with
Article 55 of the directive, financial
institutions regulated in the EU that
incurred liabilities under English law
contracts would have to seek the
inclusion of contractual recognition
of bail-in clauses in those English
law contracts.
For significant U.K. subsidiaries
and branches of non-EEA banks,
it is likely that resolution action
would be led by the resolution
authority where the bank is located.
However, it might be necessary for
the Bank of England to take actions
that recognize or facilitate those
resolution proceedings. When it
is notified that a third-country
resolution authority has taken a
resolution action, the objective and
results of which are comparable to
the exercise of a stabilization option
in the special resolution regime, the
Bank of England is obliged by the
Banking Act 2009 to make a “
third-country instrument” that recognizes
the action, refuses to recognize it, or
recognizes some parts of the action
but not others.
In addition to recognizing a third-
country resolution action, the Bank
of England may exercise one or
more of the stabilization powers
with respect to an entity or branch in
the U.K. of a third-country banking
institution to support third-country
resolution with a view to promoting
objectives which, in the third
country, correspond to the special
resolution objectives in the Banking
Act 2009.
The Bank of England may only
refuse to recognize a third-country
resolution action, and instead take
independent resolution actions
if appropriate if both the Bank
of England and the Treasury are
satisfied that one or more specified
conditions are met, including
where recognition would have
an adverse effect on financial
stability in the U.K. or the action
treats creditors located or payable
in the U.K. less favourably than
creditors with similar rights located
or payable in the third country.
Schemes of Arrangement
Schemes already fall outside the
scope of the EIR. However, there
is uncertainty around whether the
European Judgments Regulation (EU
1215/2012) applies to English schemes
of arrangement. The courts in recent
English scheme decisions have
considered jurisdiction both on the
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